Correlation Between Zegona Communications and Intuitive Investments

Can any of the company-specific risk be diversified away by investing in both Zegona Communications and Intuitive Investments at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Zegona Communications and Intuitive Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zegona Communications Plc and Intuitive Investments Group, you can compare the effects of market volatilities on Zegona Communications and Intuitive Investments and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Zegona Communications with a short position of Intuitive Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zegona Communications and Intuitive Investments.

Diversification Opportunities for Zegona Communications and Intuitive Investments

-0.6

Correlation Coefficient

Zegona Communications  Intuitive Investments

Excellent diversification

The 3 months correlation between Zegona and Intuitive is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Zegona Communications Plc and Intuitive Investments Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intuitive Investments and Zegona Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Zegona Communications Plc are associated (or correlated) with Intuitive Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intuitive Investments has no effect on the direction of Zegona Communications i.e., Zegona Communications and Intuitive Investments go up and down completely randomly.

Pair Corralation between Zegona Communications and Intuitive Investments

Assuming the 90 days trading horizon Zegona Communications Plc is expected to generate 1.16 times more return on investment than Intuitive Investments. However, Zegona Communications is 1.16 times more volatile than Intuitive Investments Group. It trades about 0.34 of its potential returns per unit of risk. Intuitive Investments Group is currently generating about 0.0 per unit of risk. If you would invest  40,600  in Zegona Communications Plc on December 24, 2024 and sell it today you would earn a total of  29,900  from holding Zegona Communications Plc or generate 73.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Zegona Communications Plc  vs.  Intuitive Investments Group

Zegona Communications Plc

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Zegona Communications Plc are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Zegona Communications exhibited solid returns over the last few months and may actually be approaching a breakup point.

Intuitive Investments

Risk-Adjusted Performance

Very Weak

Over the last 90 days Intuitive Investments Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Intuitive Investments is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Zegona Communications and Intuitive Investments

The main advantage of trading using opposite Zegona Communications and Intuitive Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zegona Communications position performs unexpectedly, Intuitive Investments can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Intuitive Investments will offset losses from the drop in Intuitive Investments' long position.

The idea behind Zegona Communications Plc and Intuitive Investments Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.